Watchdog extends probe into accounts of collapsed Thomas Cook
The Financial Reporting Council will analyse financial statements by Thomas Cook’s auditors EY stretching back to September 2017.
The UK’s financial services watchdog has extended its investigation into the collapse of package holiday giant Thomas Cook.
The Financial Reporting Council (FRC) announced that its enforcement division will now analyse financial statements by Thomas Cook’s auditors EY stretching back to September 2017.
Thomas Cook, the world’s oldest travel firm, collapsed in September after failing to produce a funding lifeline, affecting 9,000 jobs.
A week after the company’s collapse, the FRC launched an investigation in EY’s audit of Thomas Cook’s accounts and said it would delve into its statements for the period to September 30 2018.
The watchdog said it will now extend its inquiries by a further year, more than two months after starting the process, but did not reveal any of its current findings.
— FRC (@FRCnews) December 19, 2019
Investigations into the audit of the financial statements of Thomas Cook Group plc https://t.co/206ItQc2Vs
Business Secretary Andrea Leadsom said: “There are serious questions to be answered about the way in which Thomas Cook was managed and audited in the period prior to its collapse, and so I welcome that the FRC are going to look into the years preceding 2019.”
EY, one of the UK’s big four auditors, started completing Thomas Cook’s audit work in 2017 after taking over from rival PwC.
Over the past two years, the collapsed tour operator had three different finance chiefs as it failed to drive profitability and reduce the company’s significant debt burden.
In May, Thomas Cook reported a £1.5 billion half-year loss and issued its third profit warning in a year in a set of accounts which also saw EY warn that there was “significant doubt” over whether the travel firm could continue as a going concern.
In a statement, the FRC said: “The matters being investigated by the Financial Reporting Council concerning EY’s audit of the financial statements of Thomas Cook Group for the year ended September 30 2018 will now include an investigation into EY’s audit of Thomas Cook’s financial statements for the year ended September 30 2017.
“The FRC will continue to keep the scope of the investigations under close review.”
The FRC aims to complete all of its investigations within two years and has the power to take EY to tribunal if it finds evidence of wrongdoing.